Rail transit system faces legal, financial, political challenges

Supporters and opponents of Oahu’s planned rail mass-transit system agree on one thing: Any of a number of factors could stop the project once it gets started.

But exactly how those factors would play out remain fuzzy as the City and County of Honolulu prepares to begin construction of the $5.1 billion system’s first phase this spring.

Obstacles range from a lawsuit to uncertain federal funding to politics. Meanwhile, companies that have signed on to begin the project have termination clauses in their contracts in case the process is derailed.

A federal lawsuit against the mass-transit system is perhaps the biggest threat. The plaintiffs — former Gov. Ben Cayetano, University of Hawaii law professor Randy Roth, Cliff Slater and former state Judge Walter Heen — contend that the city did not explore alternatives to the 20-mile elevated rail system.

Roth said that if the lawsuit is upheld it will be the deciding factor in terminating the project, regardless of how far along construction is on the rail system.

“If [the city] loses in court, it is because they didn’t do things properly,” he said. “And they can hardly point to their own negligence for being a good excuse.”

He said he expects a hearing on the case in the Federal District Court of Hawaii sometime in August. A ruling could come shortly after that and the case ultimately will be decided by a federal judge in San Francisco.

Judges in Honolulu had to recuse themselves from the case because the proposed rail route will pass by their downtown courthouse, Roth said.

Funding could be another challenge. The Honolulu Authority for Rapid Transportation, which is overseeing the project, is counting on $1.55 billion in federal money and Federal Transit Administration officials have said they need to tweak the financial plans before releasing the money.

Another possible obstacle is Cayetano’s candidacy for mayor of Honolulu. He has proposed adding more buses as a cheaper alternative to elevated rail and has pledged to stop construction if he is elected. He was not available for comment as PBN went to press Wednesday, but he has been vocal about what he calls the system’s negative impact on the island’s aesthetics and how it will affect Hawaiian burial grounds. HART officials contend that it will not affect burial grounds.

Attorneys and legal authorities contacted by PBN said it is unclear whether Cayetano could unilaterally stop the project if he becomes mayor or whether it would require a vote by the Honolulu City Council.

“So far, I think the majority of the Council supports the [rail project],” she said. “I think if [Cayetano] presented an alternative, we would be open-minded.”

Meanwhile, an official from one of the largest contractors on the project, Kiewit Building Group, said the contracts include escape clauses that allow the city to terminate the agreements. Kiewit has the contracts to build the first two sections of the 20-mile system as well as a contract to build the storage and maintenance yard for its rail cars near Leeward Community College.

“Most contracts, virtually all public contracts have termination clauses, ways in which a party can terminate them,” said Lance Wilhelm, Kiewit’s senior vice president. “There is no such thing as a contract that cannot be stopped. To me, the big loser of this whole thing if the project is somehow interrupted is going to be the construction industry.”

HART officials said contractors would have the right to submit claims to cover their costs if a contract was terminated. The City and County would then negotiate a settlement with that contractor.

Ansaldo Honolulu JV Project Manager Enrico Fontana said in an email that he believes the project will be built and does not anticipate any problems with its $1.4 billion contract to supply the rail cars.

“Large capital projects of this nature cannot be planned or implemented on the basis of legal/political speculation,” he said. “Ansaldo has been contracted by the city to deliver the first train cars for testing by the end of 2015, and we will honor that contract.”